If you’re owed a refund, file your taxes ASAP: CPA
CPA Daniel Geltrude explains when you should file right away and when you should take advantage of the later May 17 deadline.
The IRS plans to begin distributing the new $3,000 child tax credit authorized under President Biden's $1.9 trillion stimulus plan beginning in July.
Commissioner Chuck Rettig confirmed this week while testifying before the Senate Finance Committee that the agency is poised to have the program up and running by July.
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Rettig previously told lawmakers that because of a massive backlog of unprocessed tax returns and the added responsibility of getting millions of stimulus checks out the door — as well as a one-month extension of the tax-filing deadline from April 15 to May 17 — the IRS may not have the capacity to set up an online portal for the new program.
"We now have one month less to do the development," he said just a few weeks ago. "The same people who do our income tax processing, [economic impact payment] processing are the people that need to develop that portal. So I don't have the resources to devote to that portal until filing season ends, which is May 17."
But on Tuesday, asked by Sen. Sherrod Brown, D-Ohio, whether the IRS will start sending out payments in July, Rettig confirmed the agency was prepared to do so.
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"We are," he said. "If we end up not being on track for some unforeseen situation we will advise you and the committee."
Under the law, known as the American Rescue Plan, many American parents can expect to receive $3,000 for every child ages 6 to 17 and $3,600 for every child under age 6. The expanded amounts are tapered off once income hits $75,000 for individuals and $150,000 for married couples.
If families earn too much to qualify for the expanded tax credits, they can still receive the $2,000 credit for their children if their income level is below $200,000 for individuals and $400,000 for married couples.
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Families could also opt to receive monthly payments – roughly $250 to $300 per child – instead of an annual lump sum.
Experts say the overhaul of the 24-year-old child tax credit could have significant implications for millions of families, particularly low-income households: More than 4 million children could be lifted out of poverty, according to one analysis conducted by the Center on Budget and Policy Priorities at Columbia University.
Still, the quirky design of the law sometimes means that the poorest families are bypassed and do not receive any money: Families who owed little or no income taxes were only eligible for up to $1,400 per child, rather than the $2,000 benefit provided to wealthier families, according to the Brookings Institute.
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In fact, about 40% of the tax credit went to families earning more than $100,000, while just 15% went to low-income households earning less than $30,000, Brookings found.
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